Ronald Reagan and the Mob

In the years since Ronald Reagan left the White House, sufficient time has passed for congressional committees, journalistic exposes, and even criminal prosecutions to reveal a pattern of high-level corruption in Reagan’s administration. Indeed, in his first term, forty-five presidential appointees resigned as a result of criminal or ethics investigations. Revelations surrounding the arming of U.S. backed guerrillas in Nicaragua, drug trafficking by these same “contras,” arms shipments to the Middle East, government collusion with money laundering entities such as the Bank of Credit and Commerce International (BCCI), and foreign policy decisions benefitting countries facilitating drug trafficking, particularly Panama and the Bahamas, heightened the perception of a “sleaze factor” in the Reagan administration. But, while the Reagan White House was clearly scandal-ridden, the underlying malignancy of that presidency has not been as clearly articulated. Information which has been developed in the many investigations of unethical and criminal activities in the Reagan presidency has with the passage of time and distance revealed a most disturbing fact. Ronald Reagan, the law and order, get-tough-with-criminals President, was from the inception of his Presidency in bed with organized crime.

Strong indicators surfaced in 1980 when Ronald Reagan received the endorsement of the International Brotherhood of Teamsters. That endorsement put organized crime’s stamp of approval on the Reagan campaign and was quickly followed by additional support from other sources which played a major role in putting Ronald Reagan in the White House. Not only did he receive support from organized crime, but his administration reciprocated that support and gave organized crime’s representatives seats on the highest councils of American government. Individuals with clear and compelling connections to organized crime were appointed to important governmental positions. And Reagan’s closest advisor and his best Washington-based friend throughout his Presidency was a man who Las Vegas FBI agents had called “a tool of organized crime” – Senator Paul Laxalt.

Senator Paul Laxalt

Paul Laxalt, the former Governor and Senator from Nevada, was Ronald Reagan’s “closest friend and most trusted advisor” (Wall Street Journal, June 20, 1983: 1). Laxalt, who met with Reagan two or three times a week, was described in the press as the “first friend,” and Reagan’s “eyes and ears” in the United States Senate. Senator Laxalt had served as Reagan’s campaign manager in 1976, 1980, and 1984 and had delivered the nominating speeches for Reagan at the Republican National Conventions in those years.

While Laxalt’s White House connections gave the impression of great respectability and power, his other associations were less than savory. Particularly troubling was Laxalt’s long-time friendship and political association with Allen Dorfman, the man who had supervised the use of the Teamsters Union’s Central States Pension Fund as a private bank for organized crime (Washington Post, January 21, 1983: 1). Laxalt made no secret of his association with Dorfman or his actions on Dorfman’s behalf, as the following letter sent to Richard Nixon asking that the incarcerated former Teamster Union president, Jimmy Hoffa, be pardoned indicates:

Dear President Dick:

The other day I had an extended discussion with Al Dorfman of the Teamsters, with whom I’ve worked closely for the past few years … This discussion, which described in detail the personal vendetta that Bobby Kennedy had against Hoffa, together with other information provided me over the years, leads me to the inevitable conclusion that Jim is a victim of Kennedy’s revenge.”

Laxalt went on to describe Hoffa as a “political prisoner” and asked Nixon to pardon him on his jury tampering conviction. At several other points in the letter, Laxalt called attention to his friendship with Dorfman, the man who had been named by the Justice Department’s Organized Crime Strike Force as the person “most responsible for turning the Teamster pension fund into a series of mob loans.” (Washington Post, 1983: A9): “While I don’t know Mr. Hoffa personally, I have had the occasion to have a great deal of contact with Mr. Dorfman …” Dorfman’s role in organized crime was immortalized for all eternity when he was shot down by ski-masked killers in a Chicago parking lot in 1983 (Washington, Post, January 21, 1983: 1). Accompanying Dorfman at the time of his murder was Chicago organized crime figure Irwin Weiner, who escaped unscathed from the attack.

But Allen Dorfman was not the only organized crime figure who was close to Senator Laxalt. Another major political supporter of Laxalt was the late Moe Dalitz, famous as the head of the notorious Cleveland Four during Prohibition and one of the leading organized crime figures in Las Vegas. When Laxalt was first elected to the U.S. Senate in 1974, Dalitz boasted that, “Laxalt is my boy, I put him there.” In his two campaigns for the Senate, Laxalt received $50,000 in direct campaign contributions from Dalitz and several of Dalitz’s associates who were named by Department of Justice organized crime investigators as organized criminals (Wall Street Journal, June 20, 1983: 1). When the Wall Street Journal investigated Laxalt’s ties to Moe Dalitz, Laxalt said, “He’s been so decent to me over the years, there’s no way – I don’t care what the political considerations would be – I would turn my back on him” (Wall Street Journal, June 20, 1983: 18). Further probing of Laxalt’s organized crime connections turns up close relations with still other major organized crime figures:

Ruby Kolod, who had been convicted of fraud and extortion in 1965 and a man with illicit business dealings involving the Teamsters Union, Meyer Lansky, the Chicago Outfit, and other organized crime groups, was a key fundraiser for Laxalt’s 1966 gubernatorial campaign in Nevada. When pressed on his relationship with Kolod, Laxalt said that he “did help us tremendously.”

Sydney Wyman, who contributed heavily to Laxalt’s Senatorial campaigns, was a large-scale illegal gambling operator and former business partner of Bugsy Siegel.

Allen Glick, a Pittsburgh attorney who served as a Las Vegas frontman for both the Chicago Outfit and Meyer Lansky, was also a major Laxalt fundraiser.

Organized crime operative Al Sachs, who had been identified by Justice Department sources as a major participant in organized crime’s illegal casino profiteering and skimming operations, also was a most generous contributor to Laxalt’s campaigns.

Campaign funds also came to Laxalt from Frank “Lefty” Rosenthal, one the most important organized crime figures in Chicago and a man generally acknowledged as one of the largest “layoff bankers” in the Midwest.

Morris Shenker, who provided legal representation for the Central States Pension Fund, was a business partner of Meyer Lansky, and according to informants cited by the FBI worked closely with Kansas City organized crime figures, also raised campaign funds for Laxalt.

Former Texas organized crime figure and entrenched Las Vegas gambling magnate, Benny Binion, also was one of Laxalt’s strongest and most charitable supporters.

But it is not just the depth of organized crime’s political support for Laxalt that is disturbing about the Senator from Nevada. Laxalt’s personal business dealings also reeked of organized crime associations. In 1970 Paul Laxalt and his brother Peter built a gambling casino called the Ormsby House, in Carson City, Nevada. Their partner in the Ormsby House and source of most of the capital needed to build the casino was Bernard Nemerov, another organized crime figure who, by the time Laxalt entered this business partnership, was recognized as having “a long, documented history of association with some of the most notorious members of the national crime syndicate.” An IRS investigation revealed that organized crime had been the beneficiary of a major skimming operation at the Ormsby House in the early 1970s. The IRS charged that about $2 million a year were being skimmed from the gambling proceeds at the casino and were being funneled to organized crime.

In 1987 Laxalt briefly entertained the idea of running for President himself. Despite Laxalt’s well-publicized organized crime connections, Ronald Reagan put his personal stamp of approval on the Laxalt candidacy, saying at a March, 1986, fundraising dinner for Laxalt, “Look to the son of the high mountains and peasant herders … to a friend, to an American who gave himself so that others might live in freedom” (Washington Post, 1986: A2).

Jackie Presser

Ronald Reagan’s close relationship with Paul Laxalt only begins the task of cataloguing Reagan’s organized crime-associated advisors. One of the most blatant of these relationships was Reagan’s choice of Teamster Union president Jackie Presser as a member of his presidential transition team. Jackie Presser was a long-time official of the Teamsters Union who became president of the union in 1983, even though Presser had never driven a truck in his life. Presser dropped out of school in the eighth grade and rose to prominence and power as what the Justice Department described as “a well known corrupt union leader” who’s “fingers are out to pick whatever pockets he can” (Washington Post, 1981: B13). Jackie Presser had learned the business of labor racketeering at his father’s knee. William Presser had been Teamsters Union vice-president and had been convicted on extortion charges, obstruction of justice charges, and contempt of Congress.

The Organized Crime Strike Force file in the Justice Department detailed Jackie Presser’s links to organized crime figures in Cleveland, including Moe Dalitz; and the President’s Commission on Organized Crime listed a series of kickbacks, payoffs, bribes, and other instances of racketeering in Presser’s organized crime resume. Despite Presser’s impeccable mob credentials and even though President Reagan was made aware of those credentials by law enforcement officials, Jackie Presser was appointed as a “senior economic advisor” on Reagan’s transition team in 1980. Presser’s appointment was arranged by Senator Laxalt and several senior Reagan advisors, including Attorney General Edwin Meese and Reagan campaign manager Ed Rollins. Even the President himself maintained frequent contact and friendly relations with Presser during the Reagan administration (Washington Post, September 17, 1987: A17; Washington Post, November 14, 1985: A5; New York Times, August 18, 1983: A21). Presser’s qualifications for being named as “senior economic advisor” appear to revolve around his ability to divert millions of dollars from his union treasury to various organized crime enterprises in Florida, Arizona, California, and Nevada. In fact, just prior to Reagan’s appointment of Presser to his transition team, hearings in New Jersey had discovered that Presser was the contact man for organized crime groups in that state who were trying to arrange loans from the Central States Pension Fund. Subsequent to his service on the Reagan transition team, Jackie Presser was indicted in Ohio on charges that he misappropriated $700,000 from the union treasury (Washington Post, June 10, 1983: A4). With that indictment, Jackie Presser became one of more than 100 Teamster Union officials who had been indicted for fraud, racketeering or embezzlement in just a five year period.

Roy Williams

President Reagan’s friendships with Teamster Union officials extended beyond Jackie Presser to Roy Williams. Reagan began his pursuit of the presidency in 1980 with a speech to the Teamsters in Ohio, following a private meeting with William Presser, Jackie Presser, and the man who was then president of the IBT, Roy Williams. Williams had been described by a Senate investigating committee as “an organized crime mole operating at senior levels of the Teamster Union.” In fact, the day before his private meeting with Reagan, Williams had taken the Fifth Amendment repeatedly when interrogated by a Senate Committee by his relationships with various organized criminals. None of this seemed to bother Reagan, however. His very first stop in Washington after winning the election in November, 1980, was Teamsters Union headquarters, where he met in a closed session with Presser, Williams, and other members of the IBT board of directors.

The International Longshoremen’s Association

Ronald Reagan’s friendship with the Teamsters Union was not his only labor union alliance. In a way this is quite surprising. Reagan was no friend of organized labor. He crushed the Air Traffic Controller’s Union, and he battled the AFL-CIO throughout his presidency. But when a union had strong organized crime connections, Ronald Reagan was able to overcome his anti-labor bias.

In 1983 Ronald Reagan became the first U.S. president to ever address the national convention of the International Longshoremen’s Association (Washington Post, August 17, 1983: A4). Most politicians kept a significant distance between themselves and the ILA for very good reasons. Like the Teamsters Union, the ILA had been expelled from the AFL-CIO for its organized crime connections. The President’s Commission on Organized Crime, after its investigation of the International Longshoremen’s Association, concluded that the ILA is “virtually a synonym for organized crime in the labor movement.” In a journalistic investigation of the ILA, NBC reported that as a result of a massive systematic hijacking operations, “organized crime and the Longshoremen’s Union have been able to put their tax on every item moving in or out of the ports they control” (NBC Evening News, September 6, 7, 1977). More than 30 of the ILA’s officials have been convicted on a wide variety of criminal charges (Washington Post, August 17, 1983: A4).

Former ILA president Thomas Gleason typified the union’s leadership when he took the Fifth Amendment in answer to a subpoena to appear in front of grand jury investigating corruption in the union. Gleason, in a long-standing partnership with Connie Noonan, the boss of organized crime’s gambling rackets on the New York waterfront, engaged in a series of highly questionable business deals, including selling warplanes to the Dominican Republic. When President Reagan addressed the International Longshoremen’s Union on July 18, 1983, he portrayed Gleason with the same kind of flowery language he usually reserved for his friend Paul Laxalt and his drug-running Contra “freedom-fighters.” Gleason “sticks by his friends and he sticks by his country,” Reagan said, “that kind of integrity and loyalty is hard to come by today.” The President had neglected to mention a high-level briefing he had been given just before the speech from Justice Department lawyers attempting to dissuade him from giving the address, which detailed corruption within the ILA.

Raymond Donovan

In December, 1980, Ronald Reagan appointed Raymond Donovan, the vice president and labor liaison for the Schiavone Construction Company, as his Secretary of Labor. Donovan’s name had been forwarded to the President by the Teamsters’ leadership as their first choice of the job of Labor Secretary even though he was virtually unknown to every prominent national labor leader (Washington Post, December 17, 1980: A2).

Within a month the FBI presented the results of background investigation of Donovan to the Senate Labor Committee. In its report the FBI charged that Schiavone Construction was “mobbed-up” and that Donovan had extensive “social and business ties with organized crime figures” (Washington Post, January 28, 1981: A3). One of the FBI informants had charged that Donovan had personally made a series of payoffs guaranteeing labor peace to an organized crime hit man (Washington Post, February 18, 1981: A2). In addition, the FBI’s New York office submitted a second, secret report which charged that Donovan’s construction company had granted “preferential treatment on subcontracting projects” to William “Billy the Butcher” Masselli, a New Jersey organized crime figure (Washington Post, May 30, 1985: A3). The FBI memo charged that Donovan and his associates had conspired with Masselli in “numerous, possibly fraudulent schemes.”

At his confirmation hearings, Donovan testified that he had only met Masselli three times, “totally on a business basis” even though in a newspaper interview Masselli had recounted several social events and football games he had attended with Donovan (Time, September 13, 1982: 17). Donovan’s denial rang hollow when the FBI revealed that in 892 wire taps of Masselli’s phone conversations, Donovan had been mentioned 351 times (Washington Post, May 26, 1987: A7). The investigation of Donovan’s appointment as Labor Secretary bogged down when two key witnesses against him were murdered in 1982 (Time, September 13, 1982: 17-18; New York Times, October 6, 1983: B7; Washington Post, October 6, 1983: D2; Washington Post, May 26, 1987: A7). Donovan was eventually indicted on charges of larceny and fraud (Washington Post, October 2, 1984: 1). The Justice Department charged that Schiavone construction attempted to defraud the New York City Transit Authority out of $7.4 million (Washington Post, April 4, 1986: A11).

Other Reagan Administration Ties to Organized Crime

Ronald Reagan’s relationships with Paul Laxalt, labor racketeers, and Raymond Donovan were not the only cases of close associations between administration officials and organized crime. While we may never know with certainty the true extent of organized crime’s infiltration of the Reagan White House, these additional cases reveal the probable depth of that association:

Reagan’s first National Security Advisor, Richard V. Allen had a series of business deals going with organized crime figures, including Howard Cerny, who had been intimately involved in Robert Vesco’s far-flung financial scams and who had also served as a liaison for the CIA with European organized crime groups.

Former CIA-director William Casey was a partner of Carl Biehl in Multiponics, an agribusiness firm. Biehl was well-known in the New Orleans underworld, where federal wiretaps had recorded him in illicit ventures as long ago as the early 1950s. Multiponics went bankrupt in 1971 after deceiving its investors.

Max Hugel, the deputy director of the CIA, was forced to resign after his connections to organized crime became known. Hugel had been executive vice-president of Centronics Data Computer Corporation. Part of Centronics was owned by Caesar’s World, the casino company, which at that time was under federal investigation for hidden organized crime ownership related to Meyer Lansky’s massive underworld empire. In addition, Centronics had a consultancy relationship with Moe Dalitz and his Las Vegas casinos.

Similarly, William McCann, Reagan’s nominee as ambassador to Ireland, had to withdraw his nomination after it was learned that he was a business associate of Louis Oster, a convicted stock fraud and insurance swindler who had engaged in securities violations as part of illicit dealings with Santo Trafficante and Tony Accardo.

Reagan also maintained very close political and personal relations with Walter Annenberg. Annenberg’s father Moses had a been a partner of major organized crime figures in the Nationwide News Service, which in the 1920s had supplied race results to bookies throughout the country. In 1939 both Moses and Walter Annenberg were indicted on charges of tax evasion and on charges of selling pornography illegally through the mails. Walter Annenberg’s “reward” for pioneering the wire service and the pornography industry in the United States was his appointment as ambassador to Great Britain by Richard Nixon and his role as a regular host of Reagan’s frequent vacation retreats to Palm Springs, California.

And, last but not least, Ronald Reagan maintained a close relationship with Frank Sinatra. Sinatra was a frequent guest at White House functions and was awarded the Presidential Medal of Freedom. In addition, Reagan wrote him an absolutely glowing letter of recommendation for his casino license hearing in Nevada. Sinatra’s extensive organized crime associations and dealings have been immortalized in a widely distributed 19-page Justice Department report (Washington Post, October 7, 1987: A19).

Payback

Of course, the most important payback to organized crime from the office of the U.S. President is an intangible one, the recognition and respectability that come from direct association with the President of the United States. We will never know how many investigations and prosecutions have been compromised by these types of White House involvements. We will never know how much insider information organized crime was given and subsequently made use of to enhance its profitability and avoid prosecution. But, with regard to the Reagan presidency we can point with certainty to some very tangible and positive outcomes for the mob:

In response to complaints from Paul Laxalt, the Reagan administration reigned in federal investigations of organized crime in Las Vegas. Laxalt had complained directly to the President and subsequently met three times with Attorney General William French Smith to protest what he thought were overly aggressive investigations of organized crime by the Justice Department. Laxalt charged that these investigations were deleterious to the city’s tourism business, and he complained “we have far more bureau agents than we need.”

Laxalt used his position on the Senate Appropriations Committee to reduce the number of federal investigations in Nevada.

The Reagan administration also supported Laxalt’s attempt to divert the focus of federal criminal investigation efforts from organized crime to street crime.

Laxalt unsuccessfully attempted to force the FBI to remove its political corruption hotline in Las Vegas. Despite having the support of the Attorney General, Laxalt was unable to get FBI director William Webster to close down the hotline.

During Raymond Donovan’s tenure as Secretary of Labor, prosecutions of union officials declined by 30 percent.

Reagan imposed a 33% cutback of the FBI’s investigations of gambling, prostitution, arson-for-hire, pornography, and gangland murders. The president also announced that no new undercover operations would be authorized against organized crime or white-collar crime in his administration.

The Reagan administration severely curtailed the investigative and enforcement abilities of the Securities and Exchange Commission, the Internal Revenue Service, and the Justice Department’s Organized Crime Strike Force.

One of the very first legislative proposals to come out of the Reagan White House was a bill that repealed two federal taxes on gambling.

Attorney General William French Smith tried to persuade Congress to repeal the Ethics in Government Act and the Foreign Corrupt Practices Act.

In Reagan’s first term he received 588 commutation requests. He granted only 10, all of which were to white-collar criminals with organized crime ties (Washington Post, July 27, 1984: A3). For example, in June 1984 Reagan commuted that 18-year sentence of Gilbert Dozier, a former state official in Louisiana who had been convicted of extortion and racketeering. During his trial prosecutors presented evidence of Dozier’s organized crime ties and attempts by Dozier to negotiate a murder contract against an individual associated with the case and attempts by Dozier to bribe a juror.

Reagan’s own Commission on Organized Crime publicly criticized his relationships with Teamster Union officials and suggested that these associations had delayed federal prosecutions of labor racketeers. Reagan’s friendship with Laxalt; his appointments of Presser, Donovan, Casey, Hugel, and McCann; and his glowing support of Gleason and the ILA cannot simply be ignored or dismissed as politics as usual. The Reagan administration and its activities reveal the extent to which organized crime has integrated itself into the normal day-to-day workings of the highest levels of the U.S. government and even more shockingly, the extent to which the highest ranking U.S. officials nonchalantly accept organized crime as a partner in the business of government.

Gary W. Potter

Professor, School of Justice Studies

Eastern Kentucky University

Sources

Denton, S. and R. Morris. 2001. The Money and the Power: The Making of Las Vegas and Its Hold on America, 1947-2000. New York: Alfred A. Knopf.